Sly Fox

Every studio has a mini-studio to make cheaper, quirkier films (and
keep talent happy), but none have done it as cunningly as Fox has with Fox
Searchlight.

Something strange is happening this summer. Small-scale movies with no
pre-sold elements whatsoever are breaking through the summer-movie blitz and
drawing diverse audiences. The apocalyptic 28 Days Later opened strong
against Charlie's Angels: Full Throttle and grossed more than $20 million in
ten days. That may not be the $241 million take of My Big Fat Greek
Weddinglast year's big-studio buster-but as duds like The Hulk and Angels
lose their juice, 28 Days Later is still building word of mouth, along with
the coming-of-age Brit soccer movie Bend It Like Beckham, which has grossed
over $24 million, and the sexy multiculti romp L'Auberge Espagnole, which
has scored $3.3 million on only 82 screens.

All three movies were released by Fox Searchlight, the specialty-film unit of
Twentieth Century Fox. Founded nine years ago by Tom Rothman (now
co-chairman of the studio), Fox Searchlight is, improbably, batting 1.000.
Since Peter Rice, 36, came aboard as president three and a half years ago,
all eighteen movies released on his watch have been profitable. With a
modest staff of 43 (a tenth of Miramax/Dimension's roster), Searchlight
scored its best year ever in 2002 with seven films collectively grossing
over $135 million: One Hour Photo, Kissing Jessica Stein, Brown Sugar, Super
Troopers, The Banger Sisters, The Good Girl, and Antwone Fisher. None made
it to the Oscar ball. But they all made money.

Rice started his career on the Fox lot right after graduating from the
University of Nottingham in 1989, when his father, a business crony of
Rupert Murdoch's, opened the door to a summer internship. (This has fueled
rumors that Rice is Murdoch's chosen heir to the Fox studio throne.) He rose
swiftly, building relationships with filmmakers like Bryan Singer (X-Men),
Baz Luhrmann (Moulin Rouge), and Danny Boyle (The Beach). Rice is the rare
Hollywood mix of art and commerce: a film-buff numbers cruncher. He has
plenty of English reserve; he doesn't let emotions get the better of
him
having spent years chasing Traffic, for example, he let it go when the
budget went out of range. He got his kicks watching Boyle's 28 Days Later
gross $20 million overseas, recouping its $8.7 million cost before it had
even opened Stateside. "Peter loves it," says Rothman. "That's what it
takes. You never win by spending more. You win by smarts, courage, and sweat
equity."

There's more summer counter-programming to come from Searchlight, including
Merchant Ivory's romantic comedy Le Divorce, starring Naomi Watts and Kate
Hudson, and the Sundance hit thirteen. Other distributors were scared off by
rookie director Catherine Hardwicke's hyperreal teen drama, but Rice is
confident. "There's an audience," he says. "Not everybody. But we'll make
them know about the movie and cut through to the marketplace."

For that, Rice relies on his sales team. Marketing chief Nancy Utley has made
a remarkably smooth transition from wide releases at big Fox to
Searchlight's smaller scale. And distribution chief Stephen Gilula comes
from the independent side; he co-founded the veteran art-house circuit
Landmark Theaters. Utley and Gilula inventively fine-tune the sales approach
for each movie. For L'Auberge Espagnole, their first foreign-language film,
they used "word-of-mouth screenings as a 'virus' to tell people about the
movie," Utley says. For 28 Days Later, they posted banners on Websites with
links to the trailer. Gilula launched the zombie chiller on 1,200 screens
via big-Fox distribution.

"We're integrated with the mother ship," says Rice. "We have all the benefits
of a big corporate parent, but we're able to do things in different ways
from the main studio." Fox Searchlight also does things differently from its
counterparts while sticking to its core mandate to make every movie
profitable-before going to video and DVD. Here's the sly little Fox's play
book:

 Release no more than twelve movies a year, producing half of them,
acquiring the rest. (By contrast, in 2002, Miramax released 26 movies; while
Chicago and Gangs of New York got great support, smaller films like The
Quiet American were Miramax orphans.) "We are not in the volume business,"
says Rothman. "We make every movie count."

 Spend no more than Rice's self-imposed ceiling of $15 million. One Hour
Photo, Rice's biggest Searchlight hit, was made for $12 million and grossed
$60 million worldwide.

 Rice, Utley, and Gilula, who all have radically different taste, have to
agree on buying or green-lighting a movie. (Rice backed 28 Days Later;
Gilula urged Rice and Utley to see Beckham at Cannes after seeing how the
comedy opened in London; Utley talked her male colleagues into buying
Kissing Jessica Stein.)

 Only buy or make a movie that will succeed theatrically. (A radically
old-fashioned idea. Most companies today concentrate on building their
library and selling to television and home video to make their money.)

 Before going forward, each movie must have two defined market niches: one
if the movie is perfectly executed and another if it is not.

 To maximize every film's potential, calibrate the exact target audience and
allocate resources accordingly. When Rice wouldn't let producer Mark Johnson
spend more than $10 million on The Banger Sisters, even with stars Goldie
Hawn and Susan Sarandon, Johnson was bitter. "But when it was over and done
with," Johnson says, "I was glad Peter stuck to his guns. We made the movie
we wanted, and it was successful because it only cost $10 million."

Don't give away the store in order to win an Oscar. Rice would love to
score an Oscar breakout, and learned his lesson when he went for the
statuette with Denzel Washington's Antwone Fisheronly to come up short with
critics. Utley thought they were going to lose a lot of money. Luckily, the
dollars came back in huge video and DVD salesan exception to Searchlight's
own rule.

The funny thing is, fox searchlight is only doing what all studios used to
know how to do, but somehow forgot. It will be interesting to watch how
Warner Bros. president Alan Horn handles his newly formed specialty unit.
Warners doesn't know anything about the art-film business, and the Tiffany
studio is notorious for its free-spending reliance on bigger-is-better
franchises like Harry Potter and The Matrix, and movie stars like Tom
Cruise. Horn is now reeling in eight-year Miramax marketing veteran Mark
Gill, who left last year to produce.

Now Horn and his production chief, Jeff Robinov, just need to figure out what
business they want to be in. Horn is feeling pressure from Steven
Soderbergh, a prolific director with proven chops in films both mainstream
(Ocean's Eleven) and arty (Full Frontal) whom Warners would love to keep on
campus for all his projects. But if the Warners sales staffs, already
overburdened by a huge release slate, try to handle additional specialized
movies, they'll wind up with a string of flops like George Clooney's Welcome
to Collinwood.

If Horn models little Warner on chic Miramax, he's destined to fail. Fox
Searchlight, on the other hand, is proving that you can reach audiences with
good movies, and lure hot talent
like Alexander Payne and David O.
Russell
as long as you know what you're about.